Dollar makes modest gains against its major peers on rising US yields

Market review

Dollar makes modest gains against its major peers on rising US yields

The greenback made modest gain against most of its major peers in choppy Friday's session but climbed to a one-month high versus the yen due to rally in U.S. treasury yields where the benchmark 10-year hit a fresh 2-month peak of 1.466% partly on hawkish comments by Fed officials following Wednesday's hawkish tilt by the Fed.  

Reuters reported a pair of Federal Reserve policymakers on Friday said they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy, setting up for the next big debates for the central bank: when to raise interest rates and what to do with the Fed's massive balance sheet.     In separate appearances, Cleveland Federal Reserve Bank President Loretta Mester and Kansas City Fed President Esther George both said that the economy had made "substantial further progress" toward the Fed's maximum employment and 2% inflation goal. That's the bar the Fed has set for beginning to taper its current $120 billion in monthly asset purchases, aimed at pushing down longer-term interest rates.   
The remarks came days after Fed Chair Powell said the economy is one "decent" monthly jobs report short of meeting that threshold, allowing the Fed to begin to reduce its monthly asset purchases by the Fed's next meeting Nov. 2-3.  

Versus the yen, the pair caught a fresh bid at 110.25 in Australia and climbed steadily high on cross-selling in yen to 110.56 in Europe, despite a brief dip to 110.32, price resumed recent ascent and hit a monthly month peak of 110.79 in New York afternoon, price last traded at 110.75 near the close.  

The single currency moved narrowly in subsequent Asian morning following a rebound from Thur's fresh 4-week trough of 1.1684 to 1.1750, price met selling interest at 1.1747 shortly after Asian open and inched lower in tandem with cable, price fell to session lows of 1.1701 at New York open but later pared intra-day losses and last traded near 1.1720 at the close.  

Sterling remained on the back foot despite staging a rally from Wednesday's 4-week low of 1.3610 to 1.3750 on Thurday's after Bank of England's hawkish tilt, cable met selling interest at 1.3736 in Asia and ratcheted lower in European morning on broad-based selling in sterling. Price later hit session lows of 1.3659 in early New York trading and staged a short-covering rebound to 1.3694 before moving narrowly in subdued New York afternoon. 

Data to be released this week 

France producer prices, Italy trade balance non-EU, U.S. durable goods, durables ex-transport, durables ex-defense and Dallas Fed manufacturing index on Monday.  

Australia retail sales, Germany Gfk consumer sentiment, France consumer confidence, Canada average weekly earnings, U.S. good trade balance, wholesale inventories, redbook, monthly home price, consumer confidence and Richmond Fed manufacturing on Tuesday.  

U.K. BRC shop price index, nationwide house price, Italy producer prices, Swiss investor sentiment, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, U.S. MBA mortgage application, pending home sales, and Canada producer prices on Wednesday.  

New Zealand building permits, NBNZ business outlook, NBNZ own activity, Japan industrial output, retail sales, construction orders, housing starts, China NBS Manufacturing PMI, Caixin manufacturing PMI, Australia building permits, Germany import prices, France consumer spending, CPI, producer prices, Swiss KOF indicator, Germany unemployment change, unemployment rate, CPI, Italy unemployment rate, CPI, U.K. GDP, current account, EU unemployment rate, U.S. GDP, PCE prices, initial jobless claims, continuing jobless claims and Chicago PMI on Thursday.  

Australia AIG manufacturing index, manufacturing PMI, Japan unemployment rate, Tankan big manufacturing index, Tankan big non-manufacturing index, Tankan small manufacturing index, Tankan small non-manufacturing index, Jibun bank manufacturing PMI, consumer confidence, China market holiday, Germany retail sales, Markit manufacturing PMI, France budget balance, exports, trade balance, imports, Markit manufacturing PMI, Swiss manufacturing PMI, Italy Markit manufacturing PMI, EU Markit manufacturing PMI, HICP, U.K. Markit manufacturing PMI, U.S. personal income, personal spending, PCE price index, Markit manufacturing PMI, construction spending, ISM manufacturing PMI, University of Michigan sentiment, Canada GDP and Markit manufacturing PMI on Friday.